The Long Tail Down starring Chipotle Mexican Grill

One of the less-commonly used chart system is the Point ‘n Figure (PnF) chart system. Nonetheless, I view these often because there are individuals participating in the market that trade solely on this type of chart – I want to know what they are doing and thinking.

One of the stocks that is receiving a lot of attention in the market currently is $CMG. The earnings report last week was met with a violent reaction to the downside, and now traders are looking for a floor in the stock. Very tough to do here.

In looking at the PnF chart of $CMG this evening, the new pattern that has formed caught my attention: Long Tail Down. No idea what this is? No worries. Here is an excerpt from StockCharts:

This Long Tail Down pattern occurs when there is a down move of 20 or more boxes without any reversal. Here is a look at the current PnF chart of $CMG:

Price has sliced through the lower rising Trend Line and looks interested in testing the $300 level soon. In order for the Long Tail Down reversal to occur, there must be close at $316 or higher.

Disclosure: I currently have a position in this stock.

2 thoughts on “The Long Tail Down starring Chipotle Mexican Grill

  1. The LTD shows such a significant move, you have to consider the probability of the next move. Is the risk to the upside, or to more downside?

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